Market research

Market research This section covers the following: The purpose of market research Methods of market research The use of data in market research

Market research Getting opinions from potential customers regarding their want and needs in terms of products or services

What is the purpose of market research? To identify and understand customer needs e.g. what they want from a gym To identify gaps in the market, such as looking at competitors and products to see what products or services are not currently offered To reduce business risks e.g. there may be no need for a new product or the demand for the product will not cover the costs of development To inform business decisions e.g. should Bentley cars invest heavily in a new SUV luxury car like the Bentayga?

Secondary market research When a company uses research that has already been carried out for general purposes Complete word fill

What is secondary market research? This is research by the business based on data that already exists. It is often called second-hand data as it has already been collected for another purpose. Example: The data shown in the bar chart is free from the internet and forecasts the likely spending on Easter eggs. Newspapers, libraries, government reports all provide free access to data. Market research companies such as Mintel also conduct detailed research on various markets which can be purchased Mintel website example report

Primary market research Research conducted first-hand; it is tailored to a company’s specific needs, for example a quantitative sales estimate for a brand new chocolate bar

What is primary market research? Research that is first hand and conduced either by or on behalf of a business. The business can ask exactly what it wants and to which group of people, e.g. customers or potential customers. Benefit: this method tells the business exactly what it needs to know. Drawback: It is more time consuming and expensive than secondary market research

Main methods of primary market research Surveys can be completed online, by post or face to face. Surveys are cheap and can be used regularly though have poor answer rate. Questionnaires are carried out to assess potential demand for a product. Questionnaires can identify customers, products and selling price but can be biased and time consuming. Focus groups: involve individuals being asked in-depth questions and even testing products. Focus groups give perceptive insights into customer behaviour but are extremely expensive and can produce atypical results. Key term – Focus Group A group discussion among people selected from the target market; it draws on psychology to provide qualitative insights into consumer attitudes

Qualitative data In-depth research into the opinions and views of a small group of potential or actual customers; it can provide insight into why consumers buy what they buy

What is qualitative research? This is in-depth research into people’s opinions and views, usually amongst a small group. Example: Subway could ask a small group of customers to taste new ranges of sandwiches and rate which one’s they prefer. Qualitative market research is use for finding out why customers have a view on a product or service. This can lead to a business improving a product or even creating a new product.

Quantitative data Factual research among a large enough sample of people to provide statistically reliable results, for example a survey of 500 people aged 15–24 years

What is quantitative market research? Quantitative market research is the collection of data using short and normally closed questions. Answers will be ‘yes’ or ‘no’, or on some form of scale. Example: Look at the chart for the 2015 fast food market in the UK. People were asked which fast food restaurant they visited from a list, short closed responses with little choice. Which is the most popular? What rank is Subway in the list? Why do you think 1% of those surveyed preferred not to say? Fast-food restaurants in the UK

The rise of social media and market research As many people use social media increasingly businesses are looking at the data that is available to target customer needs. Example: Facebook had over 1.79 billion users worldwide in 2016 Not only can businesses gain a large amount of research but they can also undertake subtle advertising as a result. Social media examples Social media examples

Summary questions Write down on lined paper the answers to these questions. Give an example of a source of secondary market research. What type of research is a set of smiley faces asking for customer feedback on Domino’s pizza? What is a benefit of a company testing a new drug running a focus group? Give one benefit of a business using social media to help with market research. Give one reason why market research may be of no use to a business creating a new product.